Cambridge is considering a bold step designed to boost its affordable housing inventory: allow developers to build taller buildings anywhere in the city if they agree to build only 100 percent income-restricted units. 

Citing a rapidly worsening affordability crisis, housing activists are lobbying for citywide rezoning that would clear the way for as-of-right approvals for such projects. 

“There is a strong sentiment in Cambridge that wants to build affordable housing, but there’s also opposition to density and construction and traffic,” said Joseph Kriesberg, president of the Massachusetts Association of Community Development Corporations. “This is a way to thread the needle by saying, We’re going to allow for more density, but specifically for 100 percent affordable deals.’” 

The “100 percent affordable housing overlay” would help affordable housing specialists compete with market-rate developers when acquiring properties in high-priced Cambridge, developers say. 

“We continually get outbid by the for-profit private developers doing market-rate housing,” said Peter Daly, executive director of Cambridge-based affordable developer Homeowners Rehab. “This will allow us, by doing more units on a property, to be more competitive in the bidding process.” 

But the rezoning would be unlikely to spark a massive building boom because most affordable projects still will need multiple public subsidies to complete their financing, said Larry Curtis, president of Boston-based WinnDevelopment. The more rent-restricted units, the greater the subsidies from public sources needed to bridge gaps between affordable rents and development costs. 

The developer of Port Landing, a 20-unit apartment complex containing 100 percent affordable units in Cambridge, says a proposed citywide zoning overlay would clear the way for more such projects. Photo courtesy of Patrick Rogers Photography

Curtis is skeptical that the numbers will work for projects in many Cambridge neighborhoods, given the costs of acquiring existing properties. Year-to-date, the median sale price for single-family home in Cambridge is over $1.6 million, according to analysis from The Warren Group, publisher of Banker & Tradesman. For three-family properties, that number was $1.5 million. 

“Your land acquisition costs put a great burden on the financing,” Curtis said. “If you have to knock down four million-dollar homes, your effective land cost for a development unit is going to be more than the rents can support.” 

Density Bonuses for All-Affordable Projects 

Subject to upcoming review by the city council’s ordinance committee, the overlay district is designed to offset rising development costs and shrinking federal housing subsidies. 

According to a draft version of the proposal, 100 percent affordable projects would qualify for 45-foot building heights in neighborhoods with existing maximums of 40 feet or less. In districts with existing zoning heights above 40 feet, affordable projects could be built as high as 80 feet. 

The proposed overlay has another significant benefit to developers in Cambridge, a city with a progressive reputation that’s tempered by well-organized neighborhood groups skeptical of overdevelopment. By approving such projects as-of-right, it would accelerate permitting and discourage legal appeals of projects that typically require variances or approval through Chapter 40B, the state’s affordable housing law. 

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“What’s so great about the affordable overlay it would be as-of-right zoning,” said Jason Korb, principal at Newton-based developer Capstone Communities. “The ability for abutters to appeal a project is really significant when you’re building affordable housing from a timing and risk perspective. An appeal can kill a project.” 

Homeowners Rehab used Chapter 40B to gain approval for Concord Highlands, a 98-unit all-affordable project at 671 Concord St. that broke ground in June 2018. 

“We held our breath until the appeal period ran out,” Homeowners Rehab’s Daly said. “In some of these neighborhoods, appeals are very likely.” 

Income Guidelines Limit Subsidies 

The ordinance’s proposed income guidelines could create additional financing hurdles for developers, Curtis predicts. It requires at least 80 percent of units in new affordable apartment complexes  and 50 percent in condominium buildings  to be reserved for households that earn 80 percent or less of the area median income. That removes federal low-income tax credits from the list of potential financing sources, since they are restricted for units at 60 percent or lower AMI. 

But Daly points to other sources that can fill the gaps, such as MassHousing’s Workforce Housing program that provides loans $100,000 per unit for households earning 61 to 120 percent of AMI. 

A developer of market-rate, workforce and affordable housing, Capstone Communities’ Korb is unreserved in his support of the overlay. His firm has completed all-affordable projects such as the 20-unit Port Landing apartments at 131 Harvard St. in Cambridge. The $9 million project received nine separate subsidies from federal, state and Cambridge agencies. 

Steve Adams

“Because it allows for increased density, the overlay allows affordable housing to compete with market-rate developers on costs,” Korb said. “If you pay $2 million for a four-family and it costs $200,000 to rehab, the rents for those [market-rate] units are $4,500 to $5,000. On the affordable side, you can’t build a unit for those costs and make it feasible.” 

Larry Field, deputy director of the Massachusetts Smart Growth Alliance and a Cambridge resident, said the overlay would be a first in the Bay State. 

“It’s been discussed in zoning circles in Massachusetts for a long time,” Field said. “What’s distinctive about this is it’s the entire city, not just a district. The goal is to maintain the current pipeline and augment it, so you get a few more units every year. But the limit is the funding.” 

Cambridge Thinks Big About Housing Production

by Steve Adams time to read: 4 min